Record To Report – General Ledger, Interview Ques ons and Answers

1. What are the Golden Rules of Accounts?

2. What are the Accoun ng Concepts?
3. What is the Record to Report Process?
4. What are Accruals?
5. What are Prepaid Expenses?
6. What are Deferred Revenues?
7. What are Provisions?
8. What is Fixed Assets?
9. What is Intercompany?
10. What is Accounts Receivable?
11. What is Accounts Payable?
12. What is the Purchase Journal Entry?
13. What is Bank Reconcilia on Statement?
14. What is Accounts Reconcilia on?
15. What is Revenue Reconcilia on?
16. What is discrepancy?
17. What is Deprecia on?
18. What is Amor za on?
19. What is Goodwill?
20. What are the Accoun ng Standards 116?
21. What are Recurring Journal Entries?
22. What is Reclass Journal Entry?
23. What is Reversal Journal Entries?
24. What is FX (Foreign Exchange) Revalua on?
25. What is the Month End Close Ac vi es?
26. What is the Accoun ng So ware used in Record to Report Process?
27. What are the SAP T Codes used in Record to Report Process?
28. What are the Adjustment Journal Entries?
1. What are the Golden Rules of Accounts?
Real – Debit – What Comes in
– Credit – What Goes out
Personal – Debit – Receiver
– Credit – Giver
Nominal – Debit – Expenses & Losses
– Credit – Incomes & Gains

2. What are the Accoun ng Concepts?

1. Going Concern Concept
2. Money Measurement Concept
3. Accoun ng Period Concept
4. Matching Concept
3. What is the Record to Report Process?
1. Transac on Processing
2. Reconcilia on
3. Month End Close
4. Consolida on
4. What are Accruals?
Accruals are the expenses that have been incurred but not yet paid or revenue that has been earned
but not yet collected.

Journal Entries

Accrued Expense

Debit Expense
Credit Accrued Expense

Accrued Revenues

Debit Accounts Receivable

Credit Service Revenue

Debit Cash
Credit Accounts Receivable

Accrued Interest

Debit Interest Expense

Credit Accrued Interest

Accrued Income

Debit Accrued Income

Credit Income
5. What are Prepaid Expenses?

Prepaid Expenses are the expenses that have been paid but not yet incurred or revenue that has been
collected but not yet earned. Prepaid Expenses is the opposite of Accruals.

Journal Entries

Debit Prepaid Expense

Credit Cash

Debit Expense
Credit Prepaid Expense

6. What are Deferred Revenues?

Deferred Revenue is also known as unearned revenue, refers to advance payments a company
receives for products or services that are to be delivered or performed in the future.

It is liability side of the Balance Sheet.

Journal Entries

Debit Cash
Credit Deferred Revenue

Debit Deferred Revenue

Credit Revenue

7. What are Provisions?

Provisions are made to meet specific liability or contingency.

Journal Entries

Debit Profit & Loss

Credit Provision for bad & doubtful debts

8. What is Fixed Assets?

Fixed Assets are most commonly referred to as Property, Plant, and Equipment.

Fixed assets are subject to deprecia on to account for the loss in value as the assets are used, whereas
intangibles are amor zed.

Process involves like Assets, Capitalisa on, Re rement, Interna onal Transfer, Asset Tag, Journal
Vouchers, Reconcilia on, Month End Close.
9. What is Intercompany?

Intercompany involves recording of financial transactions between different legal entities within the
same parent company.

Types of Inter Company Transactions

1. Intercompany Purchases/Sales
2. Intercompany Loans
3. Intercompany Dividends
4. Transfer of Assets or Liabilities
5. Consolidation

Journal Entries

Debit Intercompany Payable

Credit Intercompany Receivable

10. What is Accounts Receivable?

Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used
but not yet paid for by customers. Accounts receivable is listed on the balance sheet as a current asset.

Any amount of money owed by customers for purchases made on credit is AR.

The process involves Order Management, Credit Management, Order Fulfilment, Order Shipping,
Customer Master, Billing, Cash Applica on, Collec on, Payment, Customer Reconcilia on, Dispute
Management, Month End Close.

11. What is Accounts Payable?

Accounts payable (AP) refer to a company's short-term obliga ons owed to its creditors or suppliers,
which have not yet been paid.

Payables appear on a company's balance sheet as a current liability.

The process involved Procurement, Purchase Requisi on, Request for Quota on, Purchase Order,
Goods Received Note, Invoice, Vendor Master, Invoice Processing, Payment, Vendor Reconcilia on,
Customer Service Centre, Month End Close.

12. What is the Purchase Journal Entry?

Debit Purchase
Credit Accounts Payable
13. What is Bank Reconcilia on Statement?
Bank Reconcilia on Statement is a statement which Reconcilia on the bank balance as per cash book
with the balance as per passbook.

1. Cheque issued but not collected for payment

2. Cheque deposited into bank but not cleared / credited.

3. Interest charged or allowed by the bank but not showing into the book.

Types of Bank Reconcilia on Statement:

1. Manual: Compare among pass book and cash book

2. Automa c EBS (Electronic Bank Reconcilia on Statement).

14. What is Accounts Reconcilia on?
Bank Reconcilia on:
Purpose: Reconciling the company's cash records (general ledger) with the bank's records (bank
statement).
Process: Comparing the transac ons in the bank statement (deposits, withdrawals, fees) with the
company's cash account in the general ledger. Adjustments are made for outstanding checks, deposits
in transit, bank errors, and other discrepancies.
Accounts Receivable Reconcilia on:
Purpose: Ensuring that the accounts receivable (amounts owed by customers) recorded in the general
ledger match the details in the subsidiary ledger or customer statements.
Process: Matching individual customer balances with the accounts receivable control account in the
general ledger. Inves ga ng and resolving differences due to unapplied payments, credits, or billing
errors.
Accounts Payable Reconcilia on:
Purpose: Verifying that the accounts payable (amounts owed to vendors) recorded in the general
ledger align with vendor invoices and statements.
Process: Comparing vendor balances in the Accounts payable ledger with the general ledger.
Addressing discrepancies caused by unmatched invoices, prepayments, vendor credits, or billing
mistakes.
Intercompany Reconcilia on:
Purpose: Balancing transac ons and balances between different en es or divisions within the same
organiza on.
Process: Reviewing transac ons between intercompany accounts to ensure consistency and accuracy.
Resolving discrepancies caused by intercompany loans, transfers, sales, or expenses.
Inventory Reconcilia on:
Purpose: Valida ng the accuracy of inventory records in the general ledger against physical inventory
counts.
Process: Conduc ng physical inventory counts and comparing them with the inventory balances in the
general ledger. Adjus ng for shrinkage, spoilage, or discrepancies between book inventory and actual
quan es.
Credit Card Reconcilia on:
Purpose: Matching credit card transac ons recorded in the general ledger with credit card statements
from the provider.
Process: Reconciling individual credit card transac ons, fees, and payments to ensure accuracy.
Addressing discrepancies caused by missing transac ons, refunds, or processing errors.
Payroll Reconcilia on:
Purpose: Verifying payroll transac ons and deduc ons recorded in the general ledger against payroll
reports and employee records.
Process: Comparing payroll expenses, tax withholdings, and benefit contribu ons in the general ledger
with payroll reports from the payroll system. Resolving discrepancies related to employee salaries,
benefits, or payroll taxes.
15. What is Revenue Reconcilia on?
Revenue Reconcilia on is the process of comparing financial records to ensure they match and
iden fying any discrepancies.

It involves comparing revenue records from different sources such as sales, invoices, and payments.

For Example, matching sales data with bank deposits and reconciling invoices with payments received.

16. What is discrepancy?

A discrepancy refers to a difference between two expected or related figures, results, or records.

These discrepancies can arise due to various reasons, including human error, contractual agreements,
balance sheet reconcilia ons, etc.

17. What is Deprecia on?

Deprecia on is the reduc on in the value of tangible assets Ex: Property, Plant & Equipment.

18. What is Amor za on?

Amor za on is the reduc on in the value of intangible assets Ex: Patents & Trademark.
19. What is Goodwill?

Goodwill is the Intangible Asset. It is the value of the reputa on of the firm.
20. What are the Accoun ng Standards 116?
AS 116 is Leases. Lessees are required to recognize most leases on their Balance Sheets as lease
liabili es and right-of-use assets.
This means that leases previously classified as opera ng leases (off-balance sheet) are now recognized
on the Balance Sheet.
21. What are Recurring Journal Entries?
Create Recurring Journal Entry templates. Recurring entries are changed or terminated at appropriate
trigger points.
Set up Recurring Journal Entry templates in accoun ng so ware, specifying account codes, amounts,
frequencies and start dates.
Recurring journal entries are rou ne transac ons that repeat regularly within an accoun ng period.
These entries are typically generated automa cally by accoun ng so ware to record predictable and
repe ve transac ons.
For Example: Rent payments, U lity bills, Deprecia on or Loan repayments.
Types of Recurring Journal Entries
1. Accruals
2. Prepayments
3. Deprecia on
4. Amor za on
22. What is Reclass Journal Entry?
Reclass Journal Entry is used to transfer an amount from one general ledger account to another to
correct a misclassifica on or error in the ini al recording.
Reclass journal entries are essen al for maintaining accurate financial records and ensuring that
transac ons are properly categorized in accordance with accoun ng standards.
For Example, of Reclass Journal Entry:
Suppose an expense of $500 was incorrectly recorded as "Office Supplies" instead of "Repairs &
Maintenance." To reclassify this expense, you would create the following reclass journal entry:
Debit: Repairs & Maintenance Expense $500
Credit: Office Supplies Expense $500
This entry corrects the misclassifica on by debi ng the correct expense account (Repairs &
Maintenance) and credi ng the incorrect expense account (Office Supplies).
23. What is Reversal Journal Entries?
Reversal journal entries are used to correct or reverse a previously recorded transac on in accoun ng.
These entries are typically made to rec fy errors, adjust accruals or handle temporary transac ons
that need to be undone in a subsequent accoun ng period.
For Example, of Reversal Journal Entries:
Original Entry
Debit: Professional Services Expense $5,000
Credit: Accrued Expenses $5,000
Reversal Entry
Debit: Accrued Expenses $5,000
Credit: Professional Services Expense $5,000
24. What is FX (Foreign Exchange) Revalua on?
FX (Foreign Exchange) Revalua on refers to the process of adjus ng the value of foreign currency-
denominated assets and liabili es to reflect changes in exchange rates.
This adjustment is necessary to accurately report the financial posi on and performance of an en ty,
especially when dealing with foreign currency transac ons.
Ensure that foreign currency assets and liabili es are stated at their current market values in the
repor ng currency (e.g., USD, EUR) due to fluctua ons in exchange rates.
For Example, of FX Revalua on:
Suppose a US-based company has accounts receivable denominated in Euros. At the end of the
repor ng period, the exchange rate has changed from 1 EUR = 1.10 USD to 1 EUR = 1.15 USD.
Original Receivable (in EUR): 10,000 EUR
Original Value (in USD): 10,000 EUR × 1.10 = $11,000 USD
Revalued Value (in USD): 10,000 EUR × 1.15 = $11,500 USD
FX Gain/Loss = Revalued Value - Original Value = $11,500 - $11,000 = $500 USD (Gain)
Journal Entry:
Accounts Receivable (Asset): Debit $500 USD
FX Gain (Income Statement): Credit $500 USD
This example illustrates how the FX revalua on process impacts financial statements by reflec ng
changes in exchange rates on foreign currency transac ons.
25. What is the Month End Close Ac vi es?
Month End Close Ac vi es - GL
1. Journal Entries – Adjustment, Reclass, Recurring, Reversal, FX, etc.
2. Deferred Revenue – Subscrip on
3. Prepaid Expense – Rent
4. Accrued Expense – Salary
5. Deprecia on
6. Amor za on
7. Accounts Reconcilia on – BRS, AR, AP, FA, Inventory, Payroll, Intercompany
8. Cash Forecas ng
9. Review P&L
10. Close and Open new period
The Record to Report (R2R) process encompasses all ac vi es related to recording financial
transac ons, reconciling accounts, and preparing financial statements.
Month-end close ac vi es within the Record to Report process are cri cal for ensuring accurate
financial repor ng and compliance with regulatory requirements.
Here are specific month-end close ac vi es typically included in the Record to Report cycle:
Review and Post Journal Entries:
Record necessary adjustments and accruals to ensure all financial transac ons are accurately reflected
in the general ledger.
Subledger Reconcilia ons:
Reconcile subledgers (such as accounts receivable, accounts payable, fixed assets) to the general
ledger to ensure consistency and accuracy of balances.
Bank Reconcilia on:
Match bank statements with internal records to iden fy and resolve any discrepancies, ensuring all
transac ons are properly accounted for.
Intercompany Reconcilia ons:
Validate and reconcile transac ons and balances between different en es or departments within the
organiza on.
Accruals and Deferrals:
Adjust accoun ng entries to recognize expenses or revenues that have been incurred or earned but
not yet recorded.
Fixed Asset Accoun ng:
Review addi ons, disposals, and deprecia on of fixed assets, ensuring proper classifica on and
valua on.
Financial Repor ng:
Prepare financial statements including the balance sheet, income statement, and cash flow statement
in accordance with GAAP (Generally Accepted Accoun ng Principles) or other applicable standards.
Variance Analysis:
Analyse significant variances between actual results and budgeted/planned amounts, inves ga ng
and explaining the reasons behind the differences.
Close Checklist Comple on:
Follow a structured closing checklist to ensure all necessary tasks are completed, including valida ons
and approvals.
Management Repor ng:
Generate management reports and dashboards providing insights into financial performance and key
metrics.
Audit Prepara on:
Compile suppor ng documenta on and schedules needed for internal or external audits.
Compliance and Controls:
Ensure adherence to internal controls and compliance with regulatory requirements during the close
process.
Review and Approval:
Obtain appropriate approvals from management for finalized financial statements and reports.
Process Improvement:
Iden fy opportuni es for streamlining processes, improving efficiency, and enhancing the accuracy of
financial repor ng.
Month End Close Check List

Sl Task Name Account Type Date

1 Open New Accounting Period Period Open 1
2 Book FX Revaluation Intercompany 24
3 Book Interface Close Intercompany 24
4 Reconcile Intercompany Payables and Receivables Intercompany 24
5 Close Intercompany Subledger Period Close 24
6 Book Purchase Orders, Receipts, Outstanding Commitments Procurement 25
7 Reconcile General Ledger with Procurement Subledger Procurement 25
8 Close Procurement Subledger Period Close 25
9 Check sales orders pending approval Accounts Receivable 26
10 Confirm customer billing is complete Accounts Receivable 26
11 Apply cash received from customers Accounts Receivable 26
12 Accrue for renewal sales orders Accounts Receivable 26
13 Validate revenue recognition postings Accounts Receivable 26
14 Generate Revenue Variance Analysis Report Accounts Receivable 26
15 Reconcile General Ledger with Accounts Receivable SL Accounts Receivable 26
16 Close Accounts Receivable Subledger Period Close 26
17 Calculate PO accruals Accounts Payable 27
18 Calculate Non-PO accruals Accounts Payable 27
19 Post T&E Expenses T&E 27
20 Record Corporate Card Expenses T&E 27
21 Post Accrued Interest payable Income and Expense 27
22 Reconcile General Ledger with Accounts Payable SL Accounts Payable 27
23 Close Accounts Payable Subledger Period Close 27
24 Book Asset entries Fixed Assets 28
25 Book CIP Capitalization entries Fixed Assets 28
26 Book Retirement Fixed Assets 28
27 Book International Transfer Fixed Assets 28
28 Post Depreciation Fixed Assets 28
29 Reconcile General Ledger with Fixed Assets SL Fixed Assets 28
30 Close Fixed Assets Subledger Period Close 28
31 Post weekly union Payroll Payroll 29
32 Post fortnightly exempt Payroll Payroll 29
33 Post Monthly Payroll Accrual Payroll 29
34 Reconcile General Ledger with Payroll SL Payroll 29
35 Close Payroll Subledger Period Close 29
36 Check for Expired/Obsolete goods Inventory 29
37 Reconcile General Ledger with Inventory SL Inventory 29
38 Close Inventory Subledger Period Close 29
39 Process Bank Reconciliation Statements Bank 30
40 Reconcile General Ledger with Bank SL Bank 30
41 Close Bank Subledger Period Close 30
42 Close General Ledger Period Close 30
26. What is the Accoun ng So ware used in Record to Report Process?
1. SAP
2. Net Suite
3. Oracle
4. Quick Books
5. Zoho Books
6. Xero
7. Cargo Wise One
8. Great Plains
9. Sage
10. Black Line
27. What are the SAP T Codes used in Record to Report Process?
1. OB52 – GL Books Closure
2. FBL3N – GL Open line items
3. FS10N – GL Account Display
4. FB50 – GL Mul ple post
5. FB08 – GL Reverse Document Open item
6. FBRA – GL Reverse Document Clear item
7. FBR2 – GL Recurring Entries
8. F02 – GL Single journal
9. F03 – GL Clear item
10. FB02 – GL Change Document
11. FB03 – GL Display Document
28. What are the Adjustment Journal Entries?
Prepaid Expense

When you purchase something

Debit Prepaid Expense

Credit Cash

When you incur an expense

Debit Expense

Credit Prepaid Expense

Accrued Expense

Debit Expense

Credit Accrued Expenses

Accrued Revenues

Debit Accounts Receivable

Credit Service Revenue

Debit Cash
Credit Accounts Receivable
Accrued Income

Debit Accrued Income

Credit Income

Accrued Interest

Debit Interest Expense

Credit Accrued Interest

Inventory

When inventory is purchased

Debit Inventory

Credit Cash

When goods are sold

Debit COGS

Credit Inventory

Security Deposit

Debit Security Deposit

Credit Cash

Inter Company

Intercompany elimina on in consolida on – Parent company books

Debit Intercompany Payable

Credit Intercompany Receivable

Accrued Payroll

When cash is paid

Debit Accrued Payroll

Credit Cash

When reconciling payroll

Debit Payroll expense

Credit Accrued Payroll

Deprecia on

Debit Deprecia on Expense

Credit Accumulated Deprecia on

Amor za on

Debit Amor za on Expense

Credit Accumulated Amor za on